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CHAPTER 15 SUPPLEMENT—Solution
THE STATEMENT OF CASH FLOWS
Goods Sold
SE2. Cash Payments for Operating Expenses and Income Taxes: Direct Method
Short Exercises
SE1. Cash Receipts from Sales and Cash Payments for Purchases: Direct Method
Cash Payments
for Income Taxes +
Income Taxes
Cash Payments
for Purchases =
Cash Receipts
from Sales
Cash Payments for
Operating Expenses
=
=
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
a.
b.
c.
d.
Cash Payments
for Income Taxes +
Cash
Sales
Cash Receipts
from Sales
Cash Payments for
Operating Expenses
–
+
Depreciation
Expense
+
$15,600
Exercises
E1. Computing Cash flows from Operating Activities: Direct Method
Cash Payments
for Purchases
Credit
Sales
Income Taxes
Expense
+
Decrease in
Accounts Receivable
Goods Sold
Increase in
$18,000
$4,300
$1,200
Decrease in
Accounts Payable
Increase in
Accrued Liabilities ––
Decrease in
Prepaid Expenses
Income Taxes
Payable
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
(a)
Income taxes
E2. Preparing a Schedule of Cash Flows from Operating Activities: Direct Method
–
Vasquez Corporation
Schedule of Cash Flows from Operating Activities
For the Year Ended June 30, 2014
Cash flows from operating activities:
$ 15,200
102,400
Net cash flows from operating activities
Cash Receipts
from Sales
Sales
=
Increase in
Accounts Receivable
15S-3
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
(d)
Decrease in
Income Taxes
Payable
Cash Payments
for Income Taxes
Cash flows from operating activities:
Cash payments for:
Tanucci Clothing Store
Schedule of Cash Flows from Operating Activities
For the Year Ended June 30, 2014
+
Income Taxes
Expense
P1. Cash Flows from Operating Activities: Direct Method
=
Problems
15S-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
=
+
=
P2. Statement of Cash Flows: Direct Method
Flanders Corporation
Sales
Cash flows from operating activities:
(a) Cash Receipts
from Sales
(d)
=
Cash Payments for
Income Taxes
Income Tax
Expense
$52,400
–
Increase in
Income Taxes
Payable
Statement of Cash Flows
For the Year Ended June 30, 2014
Decrease in
Accounts Receivable
15S-5
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
●
The increase in cash flows from operating activities was partially offset by the $260,000
in net cash flows used by financing activities.
Reduction of accounts receivable between years ($40,000)
net cash flows from operations of $548,000. The primary reasons for the increase, in
addition to net income of $239,200, were:
Flanders Corporation’s large increase in cash from 2013 to 2014 was caused by large
Payment of cash dividend
P2. Statement of Cash Flows: Direct Method (Continued)
15S-6
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
Net Cash Flows from Operating Activities
Net Income
Dividends
Net Capital
Expenditures
Net Cash Flows from
Operating Activities
P2. Statement of Cash Flows: Direct Method (Concluded)
$548,000
=Free Cash Flow
=Cash Flow Yield
––
15S-7
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
(a)
(b)
(c)
(d)
(e)
(g)
(h)
(i)
(j)
(f)
=
–
Cash flows from operating activities:
Cash receipts from sales
–
=
Cash Payments for
Income Taxes
Income Tax
Expense
(d)
$256,400
Cash Payments
for Operating
Expenses
(c)
Operating
Expenses
=
(a) Cash Receipts
from Sales
Schedule of Noncash Investing and Financing Transactions
Cash flows from investing activities:
Cash flows from financing activities:
Sale of equipment
+
Cash payments for:
(303,000)
$ 638,400
P3. Statement of Cash Flows: Direct Method
Saudade Corporation
$ 343,900
$2,322,700
1,684,300
8,500
(180,000)
256,400
74,800
$1,298,200
(150,000)
54,900
$ (48,000)
75,000
Repayment of mortgage
Repayment of notes payable
Issue of notes payable
Net increase in cash
Net cash flows from financing activities
Statement of Cash Flows
For the Year Ended June 30, 2014
Dividends paid
Purchases
Operating expenses
Interest
Income taxes
Net cash flows from operating activities
Increase in
Income Taxes
Payable
–
Decrease in
Prepaid
Expenses
Decrease in
Accounts Receivable
Sales
Depreciation
Cash at beginning of year
Cash at end of year
Issue of mortgage for land and building
=
$ 201,000
$ 393,900
50,000
15S-8
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
●
●
●
●
●
P3. Statement of Cash Flows: Direct Method (Continued)
Increase in income taxes payable between years ($14,300)
Increase in accounts payable between years ($63,000)
Depreciation expense (a noncash expense) ($140,000)
net cash flows from operations of $638,400. The primary reasons for the increase, in
addition to net income of $252,700, were:
Reduction of accounts receivable between years ($70,000)
Saudade Corporation’s large increase in cash from 2013 to 2014 was caused by large
Payment of cash dividend
The increase in cash flows from operating activities was partially offset by the $303,000
in net cash flows used by financing activities.
Reduction of inventory between years ($90,000)
15S-9
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
3.
=
P3. Statement of Cash Flows: Direct Method (Concluded)
$466,900
$638,400
=Cash Flow Yield
Saudade Corporation has a positive cash flow yield of 2.5 times and free cash flow
Net Cash Flows from Operating Activities
Net Income
*Rounded
15S-10
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
